The goals for this lesson are:
1. Learning what an economy is
2. Learning how to think about a budget
3. Learning about the importance of competition and cooperation
What is an Economy?
Our economy is an active system or social network in which people earn money and spend money. In an economy money changes hands between people and groups of people again and again and again. For example, I earn money teaching you. Then I buy food. The grocery store gets my money, and then it pays its workers. After the grocery store pays its workers, the workers can pay for haircuts or put gas in their cars. Then the hair cutters and gas station workers get money which they spend on food and a place to live. The people who own these businesses also get money which they spend on food and a place to live. This cycle goes on and on- people earning money and spending money. We have a local economy (near where you live), a state economy, a national economy and even a world economy.
The government has a role in the economy. It collects tax dollars, which it spends on schools, roads, social security and public defense … among other things. This picture shows you how an economy works. There are 4 basic parts of an economic network. Read how the 4 parts relate to each other.
Whether an economy gets better or worse depends on the actions and decisions of families, workers, businesses and the government.
When the economy is good, there are plenty of jobs. When there are more jobs than people, wages go up. When wages go up, it is easier for families to pay their bills and they have more money to spend... or to save. When businesses sell more things, they make more money, and they can hire even more workers. This is a description of a growing economy, also known as a vibrant economy, or a strong economy. This is good for you and your family.